Liam is willing to cut lawns for a minimum of $200 a week. He is, however, paid $250 for the same service by a lawn maintenance company. This is an example of
A) consumer surplus.
B) employment discrimination.
C) producer surplus.
D) the derivation of accounting profit.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what a producer is willing to accept for a good or service and what they actually receive. In this case, Liam is willing to accept $200 but receives $250, resulting in a producer surplus of $50.

Liam Is Willing to Cut Lawns for a Minimum of $200